Heyo,

"What “risks” are you shying away from that later we will look back on as great opportunities?"

No idea who said this but it's screenshotted on my phone.

One of the things I've done to help me think clearly is to review the best and worst career decisions of my life. I mainly focus on my career in these settings in my journal but let's dive in.

In this deep dive, I highlight why I think it went well or didn't go well. It's not always obvious and not always right but it trains my brain to think in probabilities.

Sometimes you make a decision that is best in the moment and it doesn't work out. That's ok. You could have an 80% chance of being right but that is still 1 in 5 times you are wrong.

That isn't 0%. 1 in 5 happens often and is someone you know. Over the years as those averaged out, you still made the correct choice.

Now again, What risks are you shying away from but will later look back on as great opportunities?

Tip of the Week:

When doing Due diligence, you need to 'recast' the financials on how your own financials are going to look.

Your warehouse rent will be different. Your labor will be different. Your ad network will be different. Your tech stack could be different. (I once reduced the tech stack of an acquisition by 95% from $10k/month to $500/month.)

Your financing might be cheaper or might be more expensive. Your drivers might be more expensive, etc. The list is endless.

Once you have your recasted financials, then apply a % increase to accommodate errors to be on the safe side. (This could be a 10-100% increase, maybe more depending on how confident you are in those new costs.)

Now, that you are in the middle of valuing the business, you'll need to value the business on what your costs are going to be rather than the current owners.

Brent Parker left the Big 4 accounting world to dive straight into entrepreneurship. Things that I love about this conversation…he had a background in the boat industry, understood the business beforehand from his brother, started with a Franchise, then upgraded to a great business, Then bought a Water Softener Company…

We dive into…

• Corporate to Entrepreneurship Switch

• Starting his first business

• Lean years…then explosive growth through creativity

• 180 turn…bought a business across the country

His fallback…just get back into a Big 4.

1. Amazon FBA American Made Pet Food Brand - $1.5M in Subscriber Revenue

Asking: $6M

Revenue: $4.7M

Cashflow: $1.2M

What I like...dogs are hot right now. They literally outnumber kids in the US. It also makes it incredibly competitive. TACOS is at 6%. That means the Total Advertising Cost of Sales is 6%. That's good for Amazon and good for a space like this.

What I don't like...

I've seen some complete garbage from Website Closers. I hate to make generalizations but some of the worst online listings have come from WC so I generally go in very cautious.

Multiple is a little high. You won't be doing an SBA deal here unless you put more down, get a bigger seller note, etc. I also don't know when it started or how old it is.

My question is...can I build this brand off Amazon too?

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2. Amazon FBA Premium Automotive and Industrial Products Brand | 35,000 Ratings with Average 4.9 Stars

Revenue: $9.2M

Income: $3M

What I like...Great history since 2005, 35k reviews, etc. All the obvious pieces here. What's not as obvious, older Amazon brands are hard to come by. They have done a good job for a long time.

What I don't like...having 3k SKUs is very hard to manage but it does create some defensibility. With those SKUs, there are 55 suppliers. That is a lot.

Trends can be tough here and managing a warehouse + 3PL is also tough and expensive. I had a lot of warehouse employees once and I hated it. It wasn't for me. But that's just me. :)

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3. SBA Pre-Qualified | 11-Yr-Old Amazon FBA | Eyewear | 37,000 4.4-Star Reviews | Positive YOY Trends

Asking Price: $3.6 M

Revenue: $6M

Income: $1.2M

What I like...like the one above, tons of reviews, and a big history for Amazon FBA. The top 5 SKUs have 37k reviews. SBA deal.

I personally go through a lot of sunglasses. (um...yeah I have kids who sit on them or break them or scratch them.)

What I don't like...25 parent ASINs is fine but 750 child ASINs is tricky. This is similar to apparel. YOu have a ton of SKUs because you need every size (XS to XXXL) while having them in a dozen colors.

While I think there is an opportunity off Amazon here, spinning up social media is not for the faint of heart. Don't try this unless you have done this before. Maybe double down on Amazon FBA.

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